The S&P 500 was essentially flat on the week. It closed at 3,906.71 last Friday and this afternoon it ended the week at 3,811.15. This decline of about 2.5% was very unevenly distributed though. As my colleague Tom Lee pointed out in his note this morning Epicenter sectors all gained despite the high-flying Growth stocks weighing down the major averages. All eyes were on Washington early in the week as Federal Reserve Chairman Jay Powell made bi-cameral appearances to address monetary policy. As we predicted last week, he stuck to the script, was very dovish and did his best to assuage markets, although they may not have been fully convinced from the looks of it.

We’ll give you the scoop below in our Fed Watch note and try to explain to you why Jay Powell can so confidently get up in front of Congress and tell them he’s not afraid of inflation even when debt markets seemed to be doubting him.

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You see the correlations that previously justified preliminary action to prevent inflation from overheating have long-since broken down. The breakdown of the correlations that long underpinned monetary policy have occurred throughout multiple business cycles, rate environments and political administrations. The return on 30-YR US Treasury Bonds minus inflation has declined...

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